Somalia's economy is expected to grow by 2.9% this year, from 2.8% last year, before growth quickens to 3.2-3.5% in the medium term, the World Bank said on Monday.

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The Horn of Africa country has been in turmoil since 1991, when clan warlords overthrew President Siad Barre and then turned on each other. Over the past decade it has been hit by famine and sporadic terror attacks by al Qaeda-linked militant group al Shabaab.

The higher growth forecast for the next three-to-five years would depend on the country being able to sustain its current economic reform momentum, the World Bank said in a statement.

Tax collection by the government increased by 29% last year, as the economy recovered from a drought the previous year and the government changes its tax policies, the World Bank said.

"While this progress is encouraging, the available fiscal space remains insufficient to meet expenditure needs (for) education and health sectors," the bank said.

It asked the government to form a fund dedicated to education to allow authorities in Mogadishu to mobilize more cash from regional states and other partners to support learning.

In May, the International Monetary Fund said Somalia's economy was on the right track but warned that it was still vulnerable to fragile security, climate change and poverty.